Ecofiscal commission

Earlier this week, Andrew Jackson, senior policy advisor to the Broadbent Institute, wrote a thoughtful and constructively critical analysis of the Ecofiscal Commission’s first report. My first response is: thank you, Andrew. Jackson’s piece epitomizes the much-needed evolution of the debate around climate policy in Canada. It moves us squarely to the discussion we should be having: not if we need better policies, but how they should be designed.

Canada’s new Ecofiscal Commission, chaired by McGill University macroeconomics professor Chris Ragan, has a mandate to propose reforms to the fiscal system that reduce pollution and environmental damage while also increasing economic efficiency.

The core idea is to move towards a polluter-pay approach, whereby environmental costs are reflected in the market prices of economic activities. By taxing polluting activities, eco-fiscal policies incentivize actions that reduce harm to the environment and generate new revenues that could be used to reduce other taxes.